Auto Report: The Cascading Effects of the Collapse of American Automakers
Omar Nayeem, ISPU Fellow

The collapse of one or more of the "Big Three" American automobile manufacturers - General Motors, Ford, and Chrysler - will hurt virtually every area of the reeling U.S. economy, including the healthcare system and the nonprofit sector. Most arguments over the possibility of government intervention focus exclusively on the obvious stakeholders: employees and shareholders of the Big Three, employees and shareholders of U.S. automotive parts suppliers, and taxpayers. These parties bear what we will call "primary" economic costs, since they will feel the direct effects of such a contraction. A complete analysis of the issue, however, also should consider such "secondary" economic costs as the consequences for healthcare and nonprofits.

In this timely report, ISPU Fellow Omar Nayeem, looks first at the primary costs of a contraction in the auto industry since they represent the largest and most direct economic effects. He then turns his attention to secondary costs with particular attention on the healthcare and nonprofit sectors. He concludes the report with some valuable recommendations to policymakers and government officials.